How did Xiaomi become the number one mobile brand in Bangladesh?

'Principally, what's worked best for us is staying true to our vision of best specifications, highest quality and honest pricing'

In an exclusive interview with Dhaka Tribune's Zisan Bin Liaquat, the country manager of Xiaomi Bangladesh Ziauddin Chowdhury, talks about how the brand achieved the number one position in the local smartphone market and overcame policy challenges in the smartphone industry

When did Xiaomi enter Bangladesh? What are the areas you are working in? 

We started officially operating in Bangladesh on July 17, 2018. It has been more than four years of our journey here and in this time, we have been able to establish ourselves as a leading smartphone brand in the country. 

Xiaomi originally started with MIUI which was a software back in 2010. Then over time, we introduced smartphones as our first product in hardware and slowly grew this into an ecosystem of connected devices across categories based on user demand and requirement. Innovation for all has been an integral part of Xiaomi's DNA and that is exactly what we aim to do here in Bangladesh as well. 

According to Counterpoint, Xiaomi became the no.1 smartphone brand in Bangladesh with a market share of 28.8%. How did the brand achieve this? 

Principally, what's worked best for us is staying true to our vision of best specifications, highest quality and honest pricing. 

Being a customer-centric brand, we are always on the lookout for insights in changing trends, behaviour and requirements of the consumers. 

In the last four years of operation, we have introduced products across price segments, offering features that best suit user requirements. 

With an unwavering focus on quality and customer experience, we have always looked at ways to democratize technology and make it more accessible throughout the nation. 

Moreover, our local factory production has been playing an important role to achieve the number one position in the market. By setting up a factory in the country, we are now able to offer better devices to Xiaomi fans at relatively affordable prices.

What factors have played a more impactful role in Xiaomi's growth in the country?

Xiaomi works on a ‘Fan first' approach. We have a huge global community of passionate users who are intensely loyal to the Xiaomi brand and actively contribute to the company's product development. 

Moreover, one of Xiaomi's promises is to ensure local leadership. Considering that, almost all the human resources employed by Xiaomi Bangladesh is local to date. Our vision is to become a global local company. 

Xiaomi is the only Fortune 500 brand in Bangladesh, where almost all of the employees are Bangladeshis. Besides, we have also been working to provide a great brand experience to customers since entering the Bangladesh market. 

We have developed a three-pronged business model, which includes hardware, internet services and retail sales and we are working toward these goals. More than 3,000 young and energetic people are working tirelessly for the Xiaomi brand in Bangladesh. 

We are constantly keeping up with the global market and launching new devices in the country at the same time for Xiaomi fans. 

As 5G expansion has started, we have also launched 5G-enabled devices such as Xiaomi 12 Pro, Xiaomi 11T Series and Xiaomi 11i Hypercharge keeping in mind the youth of the country. 

What kind of smartphone is now being made in the Xiaomi factory? How many people are working in your factory?

About 95% of the demand for Xiaomi smartphones in the country is met by the local factory. All the entry and mid-range phones like Redmi 10A, Redmi 10C, and Redmi Note 11 are now being made in Bangladesh. 

Now over 450 people are employed at Xiaomi's factory. More than 1,000 tech jobs are likely to be created in the future.

In this year's budget, the government has withdrawn the VAT exemption benefits for mobile phone businesses at the trading phase. How has the industry been affected by this? 

In the budget for fiscal 2022-23, the 5 % Value-added Tax (VAT) exemption benefit has been withdrawn at every stage of the mobile phone business (from marketer to retailer). It should be noted here that there are three to four levels of distribution channels for mobile phone businesses up to customers. 

So, the new VAT is applicable for these stages before the handset reaches the consumers, leading the price to increase to a great extent.

Apart from this, the price of smartphones has already increased by over 20 % in the market like other various products due to the upward trend of product prices in the world market amid global economic uncertainty. 

Since 13-14 companies have already invested significant amounts of money in manufacturing mobile phones in the country, will the handset manufacturers be discouraged by the withdrawal of the VAT exemption benefit? 

Withdrawal of VAT facilities is definitely discouraging the manufacturers. 

We know that it is an essential and important thing to collect VAT and taxes for any country. At the same time, we have to prioritize some important sectors. 

Today, VAT is imposed at the retail level, but they are not trying to stop the illegal markets or grey markets. As grey products are being sold through unauthorized channels, it remains traceless which is encouraging money laundering. 

Along with raising taxes, the grey market should also be stopped through strict enforcement of the law. It is normal that taxes may increase, but it is detrimental to the sector if the tax increase and grey market expansion continue simultaneously. 

Our neighbouring country Nepal has recently started disabling all unauthorized phones from their telecommunication networks. Besides, neighbouring countries have also taken necessary measures to stop the sale of unauthorized phones. 

But sadly, despite our technological capabilities, it is not being implemented in the country.

What should be done to keep the flow of investment in the mobile phone manufacturing sector? 

Investment largely depends on economic stability at the micro and macro levels. We think that most brands will now emphasize more on managing current global economic uncertainty. 

But, it is also important to have the right and consistent policy for supporting investment in the manufacturing sector. 

In addition, it is extremely important to formulate a favourable smartphone export policy. 

For example, our existing export policy requires a minimum of 30 % value addition for locally manufactured handsets to get cash incentives. But since the smartphone is an emerging sector in Bangladesh, this condition should be relaxed for smartphone export. 

Apart from this, the brand owners and national distributors should also be given the opportunity to export smartphones like other countries. This will further enhance our export growth potential.